DP World warns of legal action on Djibouti violation of concession

DP World, the fourth-biggest port operator globally threatened legal action against Djibouti's government and third parties if they violate its concession agreement for the Doraleh Container Terminal, which remain in force.

The government’s illegal seizure of the facility “doesn’t give the right to any third party to violate the terms of the concession agreement,” the company said in a statement on Thursday.

The statement follows news reports regarding the opening of the first phase of the Chinese-built International Free Trade Zone, which DP World said is in violation of its exclusive management rights.

“DP World reserves the right to take all available legal actions, including claims for damages against any third parties that interfere or otherwise violate its contractual rights,” a company spokesperson said. "This is yet another clear example by the Djiboutian government of violating its contractual obligations and the rights of foreign investors.”

In February, the Djibouti authorities abruptly cancelled DP World’s contract to run the Doraleh terminal. DP World said the move to take control of the port was illegal and began court proceedings. The UAE denounced Djibouti’s termination of DP World’s concession, calling it an “arbitrary” breach of a signed agreement. The port operator said in March that it would consider it illegal if any third-party entered into an agreement or arrangement with the Djibouti government related to the port.

In June DP World said it will not consider alternative legal options outside a court settlement in its dispute with the Djibouti government. The Nasdaq-listed company is awaiting a ruling by the International Arbitration Court in London, a company spokesperson said at the time in response to media reports that it is considering settling the matter outside the court.

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“We await the outcome of this process. We remain committed to operating Doraleh port as per the original agreement of the concession, and we will not consider any other alternative settlement option,” the spokesperson said at the time.

Despite challenges in Africa, the Dubai-based port operator remains bullish on the African markets’ potential for growth and has continued to expand there.

In May, DP World signed a preliminary agreement with Egypt’s Suez Canal Authority and government to jointly develop a new inland container depot that will boost the flow of cargo between ships and major land transport networks in the country. It won a 30-year concession to develop a $1 billion deep-water port along the Democratic Republic of Congo’s Atlantic coast in March.

DP World’s terminals in Europe, Middle East and Africa, which also includes the home port of Jebel Ali in Dubai, recorded the strongest growth in the first quarter of 2018, up 9.8 per cent, according to a company statement earlier this year.